One statement that isn’t is that, there is an ongoing battle between the Central Bank of Nigeria (CBN) and foreign currency speculators for the heart and soul of the Nigerian Naira.

To be explicit, the heart and soul of Naira refers to its value.

If you’re Nigerian or have any interest in Nigeria, your question is, who wins?

This battle has always been waged in the background but lately given the ongoing recession and the seesaw of the value of the naira, this battle in on the forefront of all or minds.

Before we speculate (pun intended) on the answer to the question about who wins, let us first understand the tools in each contender’s arsenal or war chest if you will.

Central Bank’s Arsenal

1. Foreign Reserve

Six months ago, this weapon was seen more like a liability as the value plunged daily.

The reasons the value plunged have seemingly abated over the past several months.

Since the beginning of the year, the value has risen by approximately $6B. Advantage CBN.

2. Sustained OPEC Agreement

A couple of months ago, after many weeks of negotiations, OPEC reached a landmark agreement cutting output.

In case you missed it, the agreement spared Nigeria from any production cuts because the Niger Delta Avengers (NDA) had done enough damage to production.

It didn’t hurt to have a Nigerian, Mohammed Barkindo, the head of OPEC at the helm of those negotiations likely advocating on our behalf.

The effect is the growing coffers of CBN due to increased oil prices as a result of production cuts.

3. Increased Oil Production

There’s no doubt in my mind that someone (or someones) was settled financially leading to NDA ceasing hostile activities to the Nation’s oil infrastructure.

More production at higher oil prices mean that CBN can continues its own end to sustain sales of foreign currency.

Speculator’s War Chest

1. Time

You’ll see that the running theme of the speculator’s arsenal are more conceptual in nature.

In the speculator’s mind, it’s only a matter of time before CBN gets tired of trying to influence the value of the naira and let it float.

2. Demand and supply

Speculators believe that due to the nature of Nigeria’s consumption, the demand for both foreign goods and foreign services will always exceed supply and the corresponding foreign currency to acquire those goods and services.

80% of Nigeria’s consumption is imported goods.

We send our kids to school overseas at an alarming rate in spite of on going recession.

We spend millions of dollars paying for visas, plane tickets, BTA in our unquenchable thirst for overseas travel while many of our local tourist attraction languish in perpetual disrepair due to lack of patronage.

And despite the cry of “Buy naija to grow the naira,” by our leaders, their inability to lead by example means this won’t likely change anytime soon.

3. The recession

The recession is killing consumer spending across the board – except from entertainers and the politicians that we elected to serve us.

The recession has also killed government revenues from taxes so our smart government has actually increased tax enforcement further deepening the current crises.

When the recession ends and spending picks up, it’ll no doubt drive up already demand for forex even higher straining the already beleaguered supply lines.

One could argue that last arsenal by claiming foreign investment would increase post recession.

However, the counter argument could be made that if foreign investment isn’t occurring while capital goods are cheap and excess supply of everything exists, why would they spend when prices go up.

Even if they do, it won’t be until there is a significant confidence in the long term stability in the economy.

Who Wins?

Any answer to this question would be pure speculation.

Truth be told, anyone who could answer this question with more than 60% confidence will and should invest accordingly.

Many analysts will claim they know and that you should listen to them but many if not most have personal interests and are agenda driver depending on what side of the coin they are vested in.

No one truly knows and this sort of situation can change on a dime.

Look no further at what happened to oil prices on Thursday after the United States reacted to Syria’s alleged chemical attack by sending 59 scud missiles.

We may not be able to tell who ultimately wins. But you and I, the average Nigerian are the biggest losers as usual.

As the saying goes, when two elephants fight, it’s the ground that suffers.

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